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Old Posted Oct 2, 2015, 4:46 AM
Simplicity Simplicity is offline
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Quote:
Originally Posted by esquire View Post
As excited as I am to imagine this new complex once it is complete, it does give me the same feeling I get when I put down my credit card to make a pricy and irresponsible purchase. There is really no justifying it.

So which buildings will get hit hardest by the construction of TNS? I'm assuming there will be some inflow from the suburbs, but I'm sure some will be coming from likely class B downtown buildings?
You've gotta start with those already comfortable paying the high rents and those are the Class A tenants. I doubt we'll see any major tenants coming from the suburbs 'cause they're there for a reason. And if this thing is truly going to be 27 storeys high, you're going to need more than a couple small suburban firms moving to make it work - you need the whales. Even a large tenant like Stantec is a middling tenant in a building like this.

First thing you'd be looking at are the large law firms. Aikins, TDS, Pitblado - those guys need the high end space to justify their billings. I don't doubt at least one of them is already in talks. But then you have CN, BMO Nesbitt Burns, CRA, Deloitte, Ernst & Young - Those types of operations. They want the address and they're used to paying ~$35-$40/ft (including additional rents). And both 201 Portage and 360 Main do quite well given they're about the only Class A office space in the city aside from maybe Hydro (which we really shouldn't count), so that tenancy exists and at low vacancy rates. But that's the thing about Class A space - it's both a quantitative and qualitative assessment. Those are both just barely Class A buildings by any other city's standards, but because they're both new(ish) and tall, they're Class A here. Anything else more grandiose would immediately replace them. Which is fine. Provided that that space isn't subsidized by both the municipal taxpayer and the provincial one. Government offices don't require Class A space.

I just don't see Class B tenants - or enough, anyway - deciding that their businesses benefit to the point where rents would literally double for them. If this thing gets built, it's taking the existing Class A tenants, and that's it. Notwithstanding, of course, that it would be beneficial to move Birchwood Cushman, Stevenson, Nova-Con, etc. into the building (which would leave other vacancies behind), but even those companies would take a floor at the most and probably only half.

I think Cory made the point that MPI or somebody could move, but their building is perfectly fine.
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